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157 IN THE HIGH COURT OF PUNJAB AND HARYANA

AT CHANDIGARH

RSA-2432-2016 (O&M)

Reserved on 29.10.2025

Pronounced on : 23.01.2026

Uploaded on : 23.01.2026

Whether only operative part of the judgment is pronounced? No

Whether full judgment is pronounced? Yes

Vishal Dhingra ….Appellant

Versus

Rajinder Kumar ….Respondent

CORAM: HON’BLE MR. JUSTICE PANKAJ JAIN

*****

Present:- Mr. Shailendra Jain, Senior Advocate with

Mr. Munish Kumar, Advocate and

Mr. Rahul, Advocate

for the appellant.

Mr. Prateek Sodhi, Advocate

for the respondent.

***

PANKAJ JAIN, J.

1 Defendant is in second appeal aggrieved of judgement and

decree passed by both the Courts below whereby suit filed by the plaintiff

seeking dissolution of the partnership and rendition of the accounts stands

decreed. For convenience, parties hereinafter are referred to by their original

position in the suit, i.e. the appellant as defendant and respondent as plaintiff.

2 Parties to the lis are real brothers. As per plaintiff, he along with

defendant entered into a partnership business. They executed a partnership

deed. Both of them became partners to 1/2 share each. Partnership firm was

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registered. Defendant at the time of execution of partnership deed was

working with LIC at New Delhi. A plot was purchased by the plaintiff in

their joint name. The same was mortgaged to raise loan of Rs.3.00 lakhs from

PNB, Civil Lines, Rohtak. Father as well as brother-in-law of the parties to

the lis signed the loan documents as guarantors. Building was constructed by

the plaintiff. Defendant after leaving his service joined plaintiff.

3 Plaintiff claims to have discovered that defendant was

misappropriating the funds of firm and diverting the same to his own account

clandestinely. A dispute arose between the parties. The same was initially

settled by the family members. The settlement could not be effectuated.

Plaintiff filed a suit seeking decree of prohibitory injunction against defendant

from carrying on business and from acting as his agent. On the interim

application filed by the plaintiff, Court appointed Receiver. Under the order

of Court , Receiver gained control of the affairs of the firm. Factory premises

were sealed. Plaintiff claims that on 11.05.2001, a compromise was arrived

at between the parties. In terms thereof, defendant paid a sum of Rs.2.15

lakhs to Ashok Kumar Khanna, the brother-in-law of the parties, who stood

as a guarantor to the loan availed by the partnership firm. Another sum of

Rs.4.00 lakhs was paid to the plaintiff. The balance amount could not be paid.

Amount already paid stands forfeited as per terms of the compromise.

Plaintiff, however, undertakes to get the same adjusted while settling the

accounts. In the earlier suit filed by the plaintiff their elder brother namely

Krishan Lal was impleaded vide order dated 15.01.1999. The suit, however,

was dismissed vide judgment and decree dated 09.08.2001. The suit was

dismissed holding that the suit for prohibitory injunction was not maintainable

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as the plaintiff should have sued defendant for dissolution of partnership and

rendition of accounts. As per plaintiff, defendant is bound to render accounts

of the partnership business and the amount received by firm by letting out

the shop constructed over a joint plot.

4 Suit was contested by the defendant claiming that the suit was

not maintainable being barred under Order II Rule 2 CPC. Defendant further

claimed that in the earlier round of litigation, a compromise was arrived at

between the parties on 11.05.2001. The same was acted upon. Defendant

paid a sum of Rs.2,15,000/- to their brother-in-law, the guarantor, in addition

to Rs.3.00 lakhs paid to the plaintiff. Sum of Rs.8,50,000/- was to be paid

towards full and final settlement by the defendant to the plaintiff, but the same

could not be paid after their brother became party to the present suit. The

defendant has always been ready and willing to pay balance amount of

Rs.8,50,000/- to the plaintiff and also moved an application seeking disposal

of the suit in terms of compromise. However, the same was dismissed. Earlier

suit was dismissed vide judgment and decree dated 09.08.2004. The

defendant further pleaded that the suit was barred by limitation.

5 Suit was put to trial by the Court of the First Instance framing

following issues:-

“1) Whether the plaintiff is entitled to the decree for rendition of

accounts, as prayed for? OPP

2) Whether the suit is barred under Order 2 Rule 2 CPC? OPD

3) Whether the suit is barred by limitation? OPD

4) Whether the suit is not maintainable in the present form? OPD

5) Whether the suit is bad for non- joinder of necessary party? OPD

6) Whether the plaintiff has concealed the material facts from the

court? OPD

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7) Whether the plaintiff is estopped to file the present suit by his own

act and conduct? OPD

8) Relief.”

6 The Court of the First Instance held that neither any dissolution

deed between the partners was ever written, nor any accounts were ever

rendered. Ex.P19 partnership deed shows that both the partners contributed

to the capital of the firm and availed loan jointly. In terms of the partnership

deed Ex.P19 if the firm was to be dissolved, it could be so dissolved by any

partner willing to retire by giving three months prior notice. The accounts

were to be settled as per the balance outstanding in the capital account by

making necessary adjustment of profit/losses. Plaintiff never desired to retire

from the partnership business. The partnership deed having not been

dissolved in terms of the covenants contained in the partnership deed, the

plaintiff was within his right to maintain the present suit for rendition of

accounts. Rejecting the plea raised by defendant claiming the suit to be barred

by provisions of Order II Rule 2 CPC, the Trial Court found that the two suits

having been based on different cause of actions, the present suit cannot be

held to be barred by the principle of constructive res judicata.

7 Rejecting the defense raised by the defendant regarding the suit

being barred by limitation, the Trial Court observed that once defendant

Vishal Dhingra has paid amount in terms of compromise Ex.D10 and moved

an application Ex.D8 seeking decision of the earlier suit as per the

compromise on 25.09.2002 the present suit instituted on 28.08.2004 cannot

be said to be barred by limitation.

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8 Dissatisfied defendant preferred appeal. Lower Appellate Court

dismissed the same affirming findings recorded by the Court of First Instance.

9 Learned senior counsel appearing for the defendant has assailed

the findings recorded by the Courts below. A two-fold submission has been

raised. Senior counsel asserts that the present suit is barred under the

provisions of Order II Rule 2 CPC. In the earlier suit plaintiff claimed decree

of permanent prohibitory injunction even though he had a right to file a suit

seeking rendition of accounts. He having omitted to sue defendant for

rendition of accounts in the earlier suit, plaintiff is barred from maintaining

the present suit for the said relief. Mr. Shailendra Jain, Senior Advocate

further submits that in the earlier lis, a finding of fact has been returned by the

Courts that the partnership firm was a partnership at will and the same stood

dissolved upon service of notice by plaintiff upon defendant on 01.12.1998.

Thus, the present suit having been filed beyond prescribed period of limitation

of three years, from the date of dissolution of firm is barred by limitation. He

further submits that the question of rendition of account between the parties

will not lie in view of compromise Ex.D1 in the previous suit. The parties not

only compromised but also acted thereupon though in part. The Courts

below fell in error in decreeing a suit which is not per se maintainable under

law. In order to hammer forth his contentions he relies upon M/s Raptakos,

Brett & Co. Ltd. Vs. M/s Ganesh Property, 2017 AIR Supreme Court 4574,

State Bank of India Vs. Gracure Pharmaceuticals Ltd., 2014 AIR Supreme

Court 731, Shankar Sitaram Sontakke and another Vs. Balkrishna Sitaram

Sontakke and others 1954 AIR Supreme Court 352, Vurimi Pullarao S/o

Satyanarayana Vs. Vemari Vyankata Radharani W/o Dhankoteshwarrao &

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anr., 2020 AIR Supreme Court 395, Dadu Dayalu Mahasabha, Jaipur

(Trust) Vs. Mahant Ram Niwas and Another, 2008 AIR Supreme Court

2187, Manohar Lal & others Vs. Moti Lal & ors., 1974 PLR 251, Haris Vs.

Chathu, 2013 (25) RCR (Civil) 310, M.Vijayalakshmi Vs. T.Shanmugam,

2011 AIR Madras 88 and Cuddalore Powergen Corporation Ltd. Vs.

Chemplast Cuddalore Vinyls Limited and another, 2025 SCC OnLine SC

82.

10 Per contra counsel for the plaintiff submits that both the Courts

below after appreciating the evidence on record rightly concluded that the plea

raised by the defendant regarding maintainability of the suit relying upon

Order II Rule 2 CPC sans merit. He contends that the earlier suit instituted

by the plaintiff was based upon legal notice dated 01.12.1998 wherein the

plaintiff sought decree of prohibitory injunction against the defendant and

claimed that he was not authorized to act as an attorney holder of the plaintiff.

The defendant was called upon to stop the working of the firm till the same

was dissolved. Thus, it cannot be said that the earlier suit was based upon the

same cause of action on which the present suit has been instituted. A conjoint

reading of averments raised in the notice dated 01.12.1998 as well as the plaint

of the earlier suit would reveal that the same was based upon totally different

cause of action as compared to the present plaint. He submits that the

defendant himself relies upon the compromise Ex.D10 effected between the

parties during the earlier suit. It was one of the covenants in the said

compromise that in case the balance amount is not paid by the defendant to

the plaintiff, the amount already paid shall stand forfeited and the parties shall

assume status as if they were in the partnership business. He submits that in

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view of the aforesaid facts, the only inference that can be drawn is that the

parties continued to be partners as per the compromise Ex.D10 relied upon by

the defendant. He submits that in both the suits the defendant has denied there

being any partnership between the parties. He contends that the land on

which the firm has its operations is still joint and the defendant has till date

not rendered or settled the accounts qua the same with the plaintiff. He relies

upon Shreedhar Govind Kamerkar Vs. Yesahwant Govind Kamerkar & anr.

2007 (1) Law Herald (SC) 307 to contend that the cause of action for

maintaining suit for rendition of account does not perish. He submits that

there is ample evidence led by the plaintiff to prove that the defendant is still

running firm and business in the name of Vishal Industries and thus the

present suit having been filed for rendition of accounts cannot be held to be

barred under Order II Rule 2 CPC.

11 Lastly, he submits that the defendant having failed to render the

accounts and there being ample evidence on record to prove that the firm is

still running, the present suit cannot be held to be barred by limitation.

12 I have heard learned counsel for the parties and have carefully

gone through records of the case.

13 Even though defendant in the pleadings denied the factum of

partnership between the parties. However, during the course of arguments

Mr. Shailendra Jain, Senior counsel candidly admitted that the partnership

deed having been admitted by the defendant, the partnership can not be

denied.

14 The parties who are real brothers entered into a written

partnership deed which came into effect on 19.04.1995. There is a term with

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respect to retirement of a partner from the firm. Covenant No.13 reads as

under :-

“13. This partnership business is at will and can be dissolved as

and when decided by the partners hereto mutually in the Case if

dissolution of the firm the net assets whatever would be available

after meeting out all the business liabilities including loans shall

be distributed among the partners in the proportion to their profit

sharing ratio as referred above the Clause No. 5.”

15 From the records, it is discernible that the relation amongst

partners ran into rough weather and the plaintiff served legal notice dated

01.12.1998 upon the defendant to the following effect :-

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16 Subsequently, plaintiff filed suit seeking decree of prohibitory

injunction. The Trial Court framed following issues:-

“1. whether the suit is not maintainable in the present form? OPD

2. whether the plaintiff is entitled for discretionary relief as claimed?

OPD

3. whether the plaintiff has concealed material facts and relevant facts

from the court, if so to its effect?0PD

4. whether the firm is a joint Hindu Family firm, if so its effect? OPD”

17 During the pendency of the said suit, the parties entered into

compromise dated 11.05.2001, the terms and conditions thereof read as

under :-

“In the present case, the parties with the intervention of the

Hon'ble court and other respectables compromised on the following

terms & conditions:-

1- That the parties constituted a partnership firm on 19-4-95 in the

name of M/s Vishal Auto Industries, Hissar road Rohtak and started

running business in the same but due to one reason or others the matter

came before the Hon'ble court. On the basis of settlement/compromise

arrived at between the parties, the plaintiff has relinquished/surrendered

all his rights, title, interest in the partnership business, building, land,

machinery etc. and in consideration thereof the defendant has agreed to

pay sum of Rs.12,50,000/- in full and final settlement of the partnership

business.

2- That Sh. Ashok Kumar Khanna who is the brother in law of both

the parties had guaranteed the loan availed by the parties in the name of

M/s Vishal Auto Industries from PNB Civil lines Rohtak. The loan could

not be paid by the firm which necessitated the depositing of the amount

by the guarantor i.e.Sh.Ashok Kumar. He has deposited a sum of

Rs.2,00,000/- from 4-11-99 to 2-3-2001. The parties have settled that the

defendant shall pay to him in court, the sum of Rs.2,00,000/- plus

Rs.15000/- as interest on this amount to him.

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3- That henceforth the defendant who has taken over all the assets

and liabilities of the firm shall be liable to and entitled to pay all the

debts, income tax, sale tax, insurance charges and all other incidental

charges that may or might have become due and payable to the firm on

account of this business including payment to any labourers etc.

4- That likewise all the loan amounts standing in the name of the

firm shall be paid by Vishal Dhingra, the defendant and he shall be

entitled to receive all the firm outstanding on account of credit to the

firm from any person whatsoever. In short, the matter stand settled for

all intends and purposes in consideration of the payment of

Rs.12,50,000/- to the plaintiff and deriving all rights and title in the

partnership business by the defendant, and have nothing to do with the

land, building machinery etc. etc. in any manner whatsoever which shall

be exclusively owned, possessed and acted upon by defendant.

5- That the defendant has paid a sum of Rs. One Lac in the court to

the plaintiff out of the remaining amount sum a sum of Rs. Three Lacs

shall be paid on 30.5.2001 whereas the remaining amount of Rs. Eight

Lacs fifty thousand sha11 be paid by the defendant to the plaintiff by way

of cheque, cash, draft against duly executed receipt on or before

30.7.2001 and in case of default the amount already stand paid to the

plaintiff shall stand forfeited and the parties shall be as they were in the

partnership business and during this period the defendant shall have no

right to charge/alienate the land, building, machinery etc. In any manner

whatsoever.

6. That on the basis of the compromise arrived at the case may please be

decided.”

18 The same was acted upon but only in part. Defendant moved an

application for deciding the suit as per compromise. The application was

dismissed by the Trial Court vide order dated 25.09.2002. Operative part of

the order reads as under :-

“18. From the perusal of the file, it is observed that the present

applicant i.e. the defendant No.1 and the plaintiff entered into a

compromise dated 11.5.2001 and the statement to this effect was also

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recorded and the applicant had made the total payment of

Rs.6.15,000/- to the plaintiff and to another person namely Ashok

Kumar and Rs.8,50,000/- were to be paid on 30.7.2001 but on

30.7.2001 the proceedings of the present case were stayed by the

Hon'ble High Court in Civil revision 3460 of 2001 and in these

circumstances, I am of the considered opinion that the applicant was

not at fault for not making payment of Rs. 8,50,000/-. It is also to be

noted here that the defendant No.3 has been impleaded as party in

this case and in these circumstances the suit cannot be decided as per

compromise because the compromise was entered between the

plaintiff and the defendant No.1 only and in these circumstances I am

of the considered opinion that the plaintiff should make the payment

of Rs. 6,15,000/- to the defendant No.1 i.e. the applicant and as such

the application stands partly allowed.”

19 Suit was finally dismissed holding that by issuing legal notice

plaintiff intended to dissolve the partnership business. The same being

partnership at will stood dissolved by issuance of notice and the plaintiff ought

to have filed suit seeking decree for rendition of accounts. Matter came before

this Court in RSA No.1784 of 2005. On 12.08.2005 this Court passed the

following order :-

“It has virtually been agreed between the parties that they

shall finish their all disputes, which are pending. It has further

been agreed that the respondent, Vishal Dhingra, shall pay

Rs. 8,50,000/- along with 6% interest per annum (simple) for the

period from August 1, 2001, to January 31, 2003. Amount shall

be paid in three equal instalments. To show his bonafide,

respondent shall bring first instalment in Court on the next date

of hearing in the shape of demand draft in the name of the

appellant. It has further been agreed between the parties that

they shall put up written compromise in Court on or before

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September 15, 2005. Subject to fulfilling undertaking by the

respondent Vishal Dhingra, this Court is of the opinion that it is

desirable at this stage to hand over keys of the factory to him.

Accordingly, order dated May 12, 2005, stands modified to that

extent. Trial Court is directed to hand over key of the factory in

dispute to respondent Vishal Dhingra forth-with. If Vishal

Dhingra fails to fulfil his undertaking, key of the factory shall be

taken back from him and he shall be burdened with heavy costs.”

20 It seems later on the compromise again got aborted. Finally the

RSA was dismissed vide order dated 31.10.2006 by this Court observing as

under :-

“The plaintiff is in second appeal aggrieved against the

judgment and decree passed by the Courts below whereby suit for

injunction restraining the defendant from interfering in the joint

possession of the plaintiff in the premises and functioning and dealing

with the partnership in any manner was declined.

It has been found that the said partnership was dissolved vide

notice dated 1.12.1998 Exhibit PW1/4 issued by the plaintiff to the

defendant. The said notice has been reproduced verbatim by the

learned first Appellate Court in its judgment. A perusal thereof leaves

no manner of doubt that the partnership was dissolved at the instance

of plaintiff. The finding that the partnership stood dissolved is a

finding of fact based upon proper appreciation of evidence.

Consequently, I do not find any patent illegality or material

irregularity in the impugned order which may raise substantial

question of law for consideration by this Court in second appeal.

Dismissed.”

21 During the pendency of the RSA before this Court plaintiff filed

present suit. Senior counsel appearing for the defendant asserts that the

present suit is barred under Order II Rule 2 CPC as the plaintiff in the earlier

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suit failed to incorporate prayer regarding rendition of accounts even though

he had cause of action to do so.

22 In order to appreciate the argument raised by the learned senior

counsel appearing for the defendant, it will be apt to peruse Order II Rule 2

CPC.

“2. Suit to include the whole claim.—(1) Every suit shall include the

whole of the claim which the plaintiff is entitled to make in respect of

the cause of action; but a plaintiff may relinquish and portion of his

claim in order to bring the suit within the jurisdiction of any Court.

(2) Relinquishment of part of claim.—Where a plaintiff omits to sue in

respect of, or intentionally relinquishes, any portion of his claim, he

shall not afterwards sue in respect of the portion so omitted or

relinquished. (3) Omission to sue for one of several reliefs.—A person

entitled to more than one relief in respect of the same cause of action

may sue for all or any of such reliefs; but if he omits, except with the

leave of the Court, to sue for all such reliefs, he shall not afterwards

sue for any relief so omitted.

Explanation.—For the purposes of this rule an obligation and a

collateral security for its performance and successive claims arising

under the same obligation shall be deemed respectively to constitute

but one cause of action.”

23 The provision came up for consideration before Constitution

Bench of Supreme Court in the case of Gurbux Singh v. Bhooralal, AIR 1964

SC 1810 wherein Supreme Court held as under :-

“6. In order that a plea of a Bar under Order 2 Rule 2(3) of the Civil

Procedure Code should succeed the defendant who raises the plea

must make out; (i) that the second suit was in respect of the same

cause of action as that on which the previous suit was based; (2) that

in respect of that cause of action the plaintiff was entitled to more than

one relief; (3) that being thus entitled to more than one relief the

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plaintiff, without leave obtained from the Court omitted to sue for the

relief for which the second suit had been filed. From this analysis it

would be seen that the defendant would have to establish primarily

and to start with, the precise cause of action upon which the previous

suit was filed, for unless there is identity between the cause of action

on which the earlier suit was filed and that on which the claim in the

latter suit is based there would be no scope for the application of the

bar. No doubt, a relief which is sought in a plaint could ordinarily be

traceable to a particular cause of action but this might, by no means,

be the universal rule. As the plea is a technical bar it has to be

established satisfactorily and cannot be presumed merely on basis of

inferential reasoning. It is for this reason that we consider that a plea

of a bar under Order 2 Rule 2 of the Civil Procedure Code can be

established only if the defendant files in evidence the pleadings in the

previous suit and thereby proves to the Court the identity of the cause

of action in the two suits. It is common ground that the pleadings in

CS 28 of 1950 were not filed by the appellant in the present suit as

evidence in support of his plea under Order 2 Rule 2 of the Civil

Procedure Code. The learned trial Judge, however, without these

pleadings being on the record inferred what the cause of action should

have been from the reference to the previous suit contained in the

plaint as a matter of deduction. At the stage of the appeal the learned

District Judge noticed this lacuna in the appellant's case and pointed

out, in our opinion, rightly that without the plaint in the previous suit

being on the record, a plea of a bar under Order 2 Rule 2 of the Civil

Procedure Code was not maintainable.

Learned Counsel for the appellant, however, drew our attention to a

passage in judgment of the learned Judge in the High Court which

read:

“The plaint, written statement or the judgment of the earlier

court has not been filed by any of the parties to the suit. The only

document filed was the judgment in appeal in the earlier suit. The

two courts have, however, freely cited from the record of the

earlier suit. The counsel for the parties have likewise done so. That

file is also before this Court.”

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It was his submission that from this passage we should infer that the

parties had, by agreement, consented to make the pleadings in the

earlier suit part of the record in the present suit. We are unable to

agree with this interpretation of these observations. The statement of

the learned Judge. “The two courts have, however, freely cited from

the record of the earlier suit” is obviously inaccurate as the learned

District Judge specifically pointed out that the pleadings in the earlier

suit were not part of the record and on that very ground had rejected

the plea of the bar under Order 2 Rule 2 of the Civil Procedure Code.

Nor can we find any basis for the suggestion that the learned Judge

had admitted these documents at the second appeal stage under Order

41 Rule 27 of the Civil Procedure Code by consent of parties. There

is nothing on the record to suggest such an agreement or such an

order, assuming that additional evidence could legitimately be

admitted in a second appeal under Order 41 Rule 27 of the Civil

Procedure Code. We can therefore proceed only on the basis that the

pleadings in the earlier suit were not part of the record in the present

suit.

24 The same was followed in Bengal Waterproof Ltd. v. Bombay

Waterproof Manufacturing Co. Ltd., (1997) 1 SCC 99 observing as under :-

“xxx xxx xxx before the second suit of the plaintiff can be

held to be barred by the same it must be shown that the second

suit is based on the same cause of action on which the same in

both the suits and if in the earlier suit plaintiff had not sued for

any of the reliefs available to it on the basis of that cause of

action, the reliefs which it had failed to press in service in that

suit cannot be subsequently prayed for except with the leave of

the Court. It must, therefore, be shown by the defendants for

supporting their plea of bar of Order 2 Rule 2 sub-rule (3) that

the second suit of the plaintiff filed in 1982 is based on the same

cause of action on which its earlier suit of 1980 was based and

that because it had not prayed for any relief on the ground of

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passing off action and it had not obtained leave of the court in

that connection, it cannot sue for that relief in the present second

suit. xxx xxx xxx”

25 Thus in light of the settled proposition of law, the defendant has

to establish that both the suits were filed on the same cause of action. Question

is what ‘Cause of action’ means? Cause of action is not defined under CPC.

As per binding precedents, the cause of action consists of bundle of facts

which give cause to enforce the legal inquiry for redressal in a Court of law.

26 In Y. Abraham Ajith v. Inspector of Police, (2004) 8 SCC 100 :

2004 SCC (Cri) 2134 : 2004 SCC OnLine SC 896 Supreme Court discussed

entire series of law on the issue to observe as under :-

14. It is settled law that cause of action consists of a bundle of facts, which

give cause to enforce the legal inquiry for redress in a court of law. In other

words, it is a bundle of facts, which taken with the law applicable to them,

gives the allegedly affected party a right to claim relief against the

opponent. It must include some act done by the latter since in the absence

of such an act no cause of action would possibly accrue or would arise.

15. The expression “cause of action” has acquired a judicially settled

meaning. In the restricted sense cause of action means the circumstances

forming the infraction of the right or the immediate occasion for the action.

In the wider sense, it means the necessary conditions for the maintenance

of the proceeding including not only the alleged infraction, but also the

infraction coupled with the right itself. Compendiously, the expression

means every fact, which it would be necessary for the complainant to prove,

if traversed, in order to support his right or grievance to the judgment of

the court. Every fact, which is necessary to be proved, as distinguished from

every piece of evidence, which is necessary to prove such fact, comprises in

“cause of action”.

16. The expression “cause of action” has sometimes been employed to

convey the restricted idea of facts or circumstances which constitute either

the infringement or the basis of a right and no more. In a wider and more

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comprehensive sense, it has been used to denote the whole bundle of

material facts.

17. The expression “cause of action” is generally understood to mean a

situation or state of facts that entitles a party to maintain an action in a

court or a tribunal; a group of operative facts giving rise to one or more

bases for sitting; a factual situation that entitles one person to obtain a

remedy in court from another person. In Black's Law Dictionary a “cause

of action” is stated to be the entire set of facts that gives rise to an

enforceable claim; the phrase comprises every fact, which, if traversed, the

plaintiff must prove in order to obtain judgment. In Words and Phrases (4th

Edn.), the meaning attributed to the phrase “cause of action” in common

legal parlance is existence of those facts, which give a party a right to

judicial interference on his behalf.

18. In Halsbury's Laws of England (4th Edn.) it has been stated as follows:

“ ‘Cause of action’ has been defined as meaning simply a factual situation,

the existence of which entitles one person to obtain from the court a remedy

against another person. The phrase has been held from earliest time to

include every fact which is material to be proved to entitle the plaintiff to

succeed, and every fact which a defendant would have a right to traverse.

‘Cause of action’ has also been taken to mean that a particular act on the

part of the defendant which gives the plaintiff his cause of complaint, or the

subject-matter of grievance founding the action, not merely the technical

cause of action.”

27 The facts of the present case need to be gazed from the prism of

afore-stated proposition. The averments made in plaint of both the suits need

to be evaluated to ascertain whether both the suits are based upon same cause

of action or not.

28 In the plaint filed in the earlier suit plaintiff sought decree of

prohibitory injunction pleading as under :-

“5- That on 30-11-98 the parties quarrelled over the matter and the

matter came to police in Indira colony Rohtak chowici and City police

Rohtak, Sh. Ashok Kumar Khanna and Sh.Inderjit Taneja brother in-

laws of the parties and 3h. Chiraj Budhiraja and Sh.Ram Parkash

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Khurana and Sh.Hari Chand father of the parties intervened and

asked the parties to jointly run the factory and settle the firm account

amicably.

6- That even after the intervention and direction of otherhood, the

defendant does settle account of firm the plaintiff and interfere in the

entry of plaintiff in the premises of firm.

7- That as per terms no.14 of partnership agreement the plaintiff

asked the defendant to appoint arbitrators /Empire to settle all

disputes of partnership but he is hesitant and does not appoint the

arbitrator for the purpose as per agreement, for which the plaintiff

will file seperato petition under arbitration Act for the appointment of

arbitrators by court.

8-That the plaintiff asked the defendant not to exclude him from the

joint possession, in the affairs of the working of factory and dealing

the affairs of firm, but the defendant being strong and influential party

is adamant illegally and refused a few days back giving cause of

action.

9-That by the acts and conduct of defendant the plaintiff was to bear

heavy loss and the defendant is misappropriating the profits the assets

and others gains of the firm.

10- That no other similar suit is pending or decided.

11- That the parties reside and business concern is situated at Rohtak,

so this court has jurisdiction.

12- That the value of the suit for purposes of court fee & jurisdiction

is fixed at s. 200/- and fixed court fee of Rs.25/-is paid.

It is, therefore, prayed that a decree for prohibitory

injunction restraining the defendant from interfering and excluding

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the joint possession of the plaintiff in the premises and functioning

and dealing with the partnership in any manner and further

restraining the defendant from maxing any deal on behalf of the firm

without the permission of plaintiff in any manner be passed in favour

of the plaintiff against the defendant, it is further prayed that a

receiver be appointed to run the factory and business of the firm till

decision of suit or the factory be ordered to be locked under the court

authority so that the machinaries and other goods etc. be saved from

misappropriation by the defendant. Costs and other relief to which the

plaintiff in the present circumstances is entitled in law and equity may

also be awarded.”

29 In the subsequent suit i.e. in the present suit plaintiff pleaded as

under :-

“17. That the defendant is bound to render the accounts of all kinds

of the partnership business and that of the rent received and the

amount of deposits and interest over the same. The notice has

already been served upon him and the findings arrived at has

further given the cause of action to the plaintiff to ask for the

dissolution of partnership firm and rendition of accounts by the

defendant.

18. That after the decision of the case, the plaintiff has called upon

the defendant to dissolve the partnership firm and render the

accounts of the firm to the plaintiff as claimed above. But he has

refused to show the accounts books, and settle and render the

accounts a week ago. Hence, this suit.

19. That the cause of action has arisen to the plaintiff partly on

9-8-2004 when the suit of the plaintiff for permanent prohibitory

injunction was dismissed and it was held that the plaintiff should

go for dissolution of partnership and rendition of accounts and a

week ago from the refusal of the defendant to render the account as

stated above. Hence, this suit.

Page 20 of 23

20. That the partnership business is at Rohtak and the accounts

books are with the defendants. The amount recovered by the

defendants of the partnership business from various parties prior

to the filing of the earlier suit and during the pendency of that suit

is with the defendant besides the rent received from various tenants

of the portion of the factory premises which was purchased by the

plaintiff from his own sources in equal share in the name of plaintiff

and defendant. Therefore, the Hon'ble court has jurisdiction to try

the present suit.”

30 Chapter VI of the 1932 Act deals with the dissolution of firm.

Section 45, 46, 47, 48, 49 and 50 of the 1932 Act deal with rights, liabilities,

continuing authority of partners after dissolution. The authority of a partner

does not cease to exist merely upon dissolution of a firm. He continues to

have authority till the affairs of the firm are wound up. He remains authorized

to enforce his rights. Section 48 of the 1932 Act deals with mode of settlement

of accounts between partners. Defendant cannot deny that during the

pendency of the earlier suit, he admitted to pay for the rights of the plaintiff.

Though the compromise was executed, but the same could be acted only in

part. His application filed seeking disposal of the suit in terms of the

compromise did not find favour with the Court. Even before Appellate Court,

i.e. in RSA before this Court there was an attempt made to get the suit

compromised and the defendant agreed to pay plaintiff, but the same could

not fructify. Plaintiff as per the plaint has pleaded cause of action in his favour

on the basis of that compromise. In view thereof, this Court does not find

Page 21 of 23

that bar under Order II Rule 2 CPC can be invoked by the defendant to claim

suit for rendition of accounts being barred under Order II Rule 2 CPC.

31 Coming on to the issue of limitation suit for rendition of accounts

is governed by Article 5 of the Limitation Act, 1963 (for short, ‘the 1963 Act’)

which reads as under :-

5. For an account and a share of

the profits of a dissolved

partnership.

Three years The date of the

dissolution.

32 In view of the fact that under Sections 45, 46, 47, and 48 of the

1932 Act, this Court finds that the plaintiff has a right subsisting till the affairs

of the firm are wound up. It has come on record that the firm is still being run

by the defendant under the same name and from the joint premise. Repeated

acknowledgements by the defendant admitting the right of the plaintiff have

an effect of extending the limitation under Section 18 of the 1963 Act. In

written statement filed in the present suit also, defendant pleaded that :-

7. Para no.7 of the plaint is a matter of record. The plaintiff had chosen

to file a permanent injunction which was 9.8.2004. Appeal against that

a suit for dismissed on decree and Judgment too was rejected on

27.4.2005. Second appeal by plaintiff is lying in the High court and is

yet under consideration for admission. Appointment of receiver order

had lost in the light of dismissal of suit even.

Let it be submitted here that the court of learned Additional Civil

Judge Sr. Divn. In its judgment dated 9.8.2004 had clearly and

categorically held that the partnership firm had stood dissolved on

1.12.1998 and that the plaintiff thus can not claim relief for dissolution

of partnership. Anyhow, the plaintiff after assessing from all aspects had

demanded a sum of Rs.12,50,000/- as his share in the land building,

machinery and all other assets and business and the same was accepted

by defendant. Compromise deed was executed and the parties had acted

upon the same. Compromise deed is on the file of Suit No.194C of

Page 22 of 23

1999/2004 decided Anyhow, it is further submitted that the keys on

9.8.2004. were handed over to the defendant by the learned court under

the orders of Hon'ble High court and the defendant is now re-running

the factory as its sole proprietor after investing a lot from his pocket for

its renovation and restart after it remaining closed for 3 long years.”

33 The difference between dissolution of firm and the winding up

of affairs of the firm, though subtle is recognized by law under Chapter VI of

the 1932 Act. Though the limitation prescribed under Article 5 of the 1963

Act, commences from the date of dissolution of the firm but where the

defendant partner acknowledges his liability corresponding to the right of the

plaintiff based upon Sections 45, 46, 47, and 48 of the 1932 Act, the limitation

gets a fresh lease of life and has to be computed afresh from the time when

such acknowledgement is executed. Thus, even if the partnership firm is held

to have been dissolved on 01.12.1998 right of the plaintiff to sue continued in

light of repeated agreements between the parties as the affairs of the firm were

never wound up.

34 In the present case, defendant having repeatedly acknowledged

his liability to settle the account cannot take refuge under law of limitation to

plead that the suit is barred.

35 In view of above, this Court finds no reason to interfere in well-

reasoned findings recorded by the Courts below qua decreeing a suit for

rendition of accounts. Since the partnership firm was never wound up and is

still continuing even though resolved on 01.12.1998, this Court finds no

reason to interfere in the preliminary decree passed by the Courts below.

Page 23 of 23

36 Finding no merits in the present appeal, the same is ordered to be

dismissed.

37 Pending miscellaneous application, if any, also stands disposed

off.

( PANKAJ JAIN )

23.01.2026 JUDGE

Pooja Sharma-I

Whether speaking/reasoned: Yes/No

Whether reportable: Yes/No